Sotheby's Enters into Revolving Credit Facilities
Aug 25 14
Sotheby's and certain of its wholly-owned subsidiaries are party to certain credit agreements with an international syndicate of lenders led by General Electric Capital Corporation which provides for separate dedicated revolving credit facilities for Sotheby's Agency segment and its Finance segment. The Agency Credit Agreement established an asset-based revolving credit facility the proceeds of which may be used for the working capital and other general corporate needs of the Agency segment, as well as for Principal segment inventory investments. The Finance Credit Agreement established an asset-based revolving credit facility the proceeds of which may be used for the working capital and other general corporate needs of the Finance segment, including the funding of client loans. The Credit Agreements allow Sotheby's to transfer the proceeds of borrowings under each of the revolving credit facilities between the Agency and Finance segments. On August 22, 2014, the Credit Agreements were amended and restated, among other things, to: Increase the aggregate commitments under the Credit Agreements from $600 million to $850 million, including a $50 million incremental revolving credit facility with higher advance rates against certain assets and higher commitment and borrowing costs. The Incremental Facility matures on the first anniversary of the closing of the Credit Agreements (August 21, 2015), which maturity date may be extended for an additional 365 days on an annual basis with the consent of the lenders under such Incremental Facility who agree to extend their incremental commitments. As a result of this increase in the aggregate borrowing capacity of the Credit Agreements, the borrowing capacity of the Agency Credit Agreement will increase from $150 million to $300 million and the borrowing capacity of the Finance Credit Agreement will increase from $450 million to $550 million. Increase the advance rate inventory, and include certain of Sotheby's trademarks in determining the borrowing base availability of the Agency Credit Agreement. Increase the maximum permissible amount of net outstanding auction guarantees from $300 million to $600 million. Extend the maturity date of the Credit Agreements from February 13, 2019 to August 22, 2019, exclusive of the Incremental Facility, which has a maturity date of August 21, 2015 but may be renewed annually, as discussed above. Sotheby's incurred approximately $2.2 million in fees related to the amendment and restatement of the Credit Agreements, which will be amortized on a straight-line basis through the August 22, 2019 extended maturity date of the Credit Agreements. In addition, Sotheby's could incur up to approximately $1.1 million in incremental annual commitment fees associated with the increased borrowing capacity of the Credit Agreements.
Sotheby's Announces Unaudited Consolidated Earnings Results for the Second Quarter and Six Months Ended June 30, 2014; Provides Tax Guidance for 2014
Aug 8 14
Sotheby's announced unaudited consolidated earnings results for the second quarter and six months ended June 30, 2014. For the quarter, the company reported total revenues of $335,817,000 compared to $304,868,000 a year ago. Operating income was $130,431,000 compared to $133,314,000 a year ago. Income before taxes was $122,759,000 compared to $122,450,000 a year ago. Net income attributable to the company was $77,632,000 or $1.11 per diluted share compared to $91,729,000 or $1.33 per diluted share a year ago. Adjusted operating income was $148,985,000 compared to $133,314,000 a year ago. Adjusted net income was $87,837,000 or $1.26 per diluted share compared to $91,729,000 or $1.33 per diluted share a year ago. Operating income decreased $2.9 million (2%) due to special charges of $18.6 million. Adjusted net income decreased 4%, largely due to the increase in the company's effective tax rate. Second quarter net income was adversely impacted by after-tax special charges of $10.2 million.
For the six months, the company reported total revenues of $492,628,000 compared to $406,613,000 a year ago. Operating income was $134,522,000 compared to $112,001,000 a year ago. Income before taxes was $117,041,000 compared to $90,707,000 a year ago. Net income attributable to the company was $71,518,000 or $1.01 per diluted share compared to $69,384,000 or $1.00 per diluted share a year ago. Adjusted operating income was $158,779,000 compared to $112,001,000 a year ago. The achieved a 42% increase in adjusted operating income, in the first half of this year is principally due to a 24% increase in net auction sales to a first half total of $2.7 billion, which generated an 18% increase in auction commission revenues. Adjusted net income was $84,859,000 or $1.20 per diluted share compared to $69,384,000 or $1.00 per diluted share a year ago. First half net income was adversely impacted by after-tax special charges of $13.3 million.
Management estimates that Sotheby's annual effective income tax rate for 2014, excluding discrete items, will be approximately 38%. In 2013, Sotheby's effective income tax rate, excluding discrete items, was approximately 30%. The increase in the estimated annual effective tax rate between the periods is principally due to management's conclusion in the first quarter of 2014 that the current and future earnings of Sotheby's foreign subsidiaries will not be indefinitely reinvested overseas.
Sotheby's Declares Quarterly Dividend, Payable on September 15, 2014
Aug 7 14
The Board of Directors of Sotheby's declared a quarterly dividend of $0.10 for the third quarter of 2014. The third quarter dividend is payable on September 15, 2014 to shareholders of record as of September 2, 2014.